Experts call for reversing 18% GST on safe packaged milk to promote dairy sector formalization, nutrition and growth: SDPI

ISLAMABAD, 2025: The Sustainable Development Policy Institute (SDPI) organized a focused policy dialogue titled “Enabling Dairy Sector Transformation through Smart Taxation”. The session, moderated by Zainab Naeem and organized as part of the Sustainable Development Policy Institute’s (SDPI) pre-budget consultation
series, aimed to finalize a joint statement and action plan.
In his opening remarks, Dr. Abid Qaiyum Suleri, Executive Director of SDPI, highlighted that despite contributing significantly to economic activity, over 90% of Pakistan’s dairy sector remains undocumented and untaxed. “Documentation of the economy is crucial not just for fiscal stability but also for tackling malnutrition and ensuring food safety,” said Dr. Suleri. He emphasized that the current tax policy, particularly the 18% GST on
safe packaged milk, disincentivizes the formal sector and undermines both public health and economic development.
Representing the private sector, Dr Muhammad Nasir of Friesland Campina Engro Pakistan stressed the sector’s socio-economic importance, especially in rural areas. He also flagged Pakistan’s alarming 40% stunting rate and warned that increased taxation on safe packaged milk could worsen national nutrition indicators. Moreover, he
elaborated that due to 18% GST on safe packaged milk 35% of existing formal dairy farmers were forced to shift back to the unsafe and unregulated loose milk market.
Aatekah Mir from Nestlé Pakistan and Dr. Shehzad Amin, CEO of the Pakistan Dairy Association, also stressed the importance of safe packaged milk. Dr Muhammad Anjum Iqbal, Animal Nutritionist at the Ministry of National Food Security and Research urged the government to incentivize quality milk production, highlighting the need for improving animal health, diet, and environment besides lowering tax on safe packaged milk.
During the discussion, a major concern was highlighted: around 92% of the milk market consists of loose, untaxed milk, while only 8% is safe, hygienically packaged, and taxed.
This discourages the regulated sector and creates an uneven playing field. All regulatory bodies and food authorities across Pakistan urge to regularize dairy sector, but current tax policy discourages it.
In conclusion, stakeholders unanimously called for immediate reduction of GST on packaged milk to 5%, recognition of milk as a nutrition-sensitive commodity, alignment of fiscal policies with health and nutrition goals, and promotion and protection of the formal dairy sector through public awareness and infrastructure development.